CONDITIONS REMAIN CHALLENGING IN THE NORTHERN IRELAND PROPERTY MARKET AT MID-YEAR POINT
1st July 2010 | The Belfast office of CB Richard Ellis Group (“CBRE”), the international commercial real estate firm, today launched their latest bi-monthly assessment of conditions in the Irish commercial property market.
According to the report, while there have been some signs of improvement in the Dublin market in recent months, conditions in the Northern Ireland market remain challenging. However, the property consultants say that there has been some momentum in terms of transactional activity in the region in recent months, particularly in the retail sector.
According to CB Richard Ellis, 21% of international retailers have a presence in the Northern Ireland market which is very good in an international context and clearly highlights the opportunity for more international retailers to establish operations in the region. The UK retailer Paperchase are to open their first standalone store in Northern Ireland at Arthur Street in Belfast while French retailer Decathalon have recently opened their first Northern Ireland store near IKEA on the outskirts of the city. Poundland and Poundworld are continuing to open new stores across Northern Ireland. Meanwhile, menswear retailer Blue Inc has acquired stores in Belfast, Derry, Enniskillen, Newtownards, Newtownabbey and Newry. Mothercare UK Ltd are continuing to relocate to retail parks in the region and are due to open a new store in Damolly Retail Park in November. CB Richard Ellis says that it remains to be seen what impact the recent 2.5% hike in the VAT rate will have on the retail sector next year although it is certain that the quantum of Euro shoppers from the Republic will continue to decline, particularly considering the weakness of the Euro.
The announcement that the well-known Priory group is to open a number of care home facilities in Northern Ireland over the next number of years is important for the nursing home sector in the region, according to CB Richard Ellis. They say that a number of significant land sales have reported been agreed in north Belfast and Bangor in recent weeks but these transactions have yet to sign.
Although the hotel sector in Belfast has been holding up quite well and tourism has been helped by the arrival of a number of cruise ships in recent weeks, the property consultants say that the leisure sector of the Belfast market is very depressed, citing the fact that the high-profile Odyssey Pavilion in Belfast and four well-known Belfast pubs, the Limelight, Katy Daly’s, Spring & Airbrake and Auntie Annie’s have recently been placed into receivership.
According to the July bi-monthly report, activity in the office sector in Belfast remains weak. CB Richard Ellis says that there are only a limited number of significant active requirements with the majority of occupiers looking for up to 929m2 of accommodation. At this level, there is plenty of choice which is enabling occupiers to negotiate very good deals with landlords. Considering the increasing pressure to cut public sector costs in the region, the property consultants say that they expect Government to start renegotiating lease terms on the office accommodation they occupy in Northern Ireland over the coming months.
In the industrial sector, CB Richard Ellis report that part of the Sanmina industrial complex in Lisburn has recently been sold to a local manufacturing company for approximately £1.6 million.
In the investment sector, the Damolly Retail Park in Newry has recently changed hands for in the region of £28 million, reflecting a yield of approximately 6.25%.
According to the property consultants, this sale, in addition to the recent sale of the Richmond Centre in Belfast demonstrates that there is institutional investor interest in Northern Ireland assets provided they are priced sensibly. We are now entering the traditional quiet season in Northern Ireland so any property deals that are not completed in the next number of weeks unlikely to complete until September. It is estimated that 6% of the loans going into NAMA are located in Northern Ireland. While there were no Northern Irish properties in the first tranche of loans that transferred over earlier this year, Northern Ireland assets are included in the second tranche which is currently in the process of being transferred.
Brian Lavery, Managing Director at CB Richard Ellis in Belfast said, “The cuts in public spending announced in the UK emergency Budget last month along with the increase in the VAT rate to 20% from January 2011 will have far-reaching implications for the economy and property market in the Northern Ireland region. However, plans to consider changing the rate of corporation tax in Northern Ireland along with the possible re-introduction of Enterprise Zones in the region are broadly welcome”.
Director of Research, CBRE
Tel:+353 1 618 5543
Mobile:+353 87 2727115
Managing Director, CBRE Belfast
Tel:+28 9043 8555
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 100 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2010, for the sixth year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni